Food companies and retailers doing business in California should take note of the recent proposed statement of decision in the case challenging the coffee industry’s failure to warn of the presence of acrylamide in coffee under Proposition 65. On March 28, 2018, the Superior Court of California at Los Angeles County issued a proposed statement of decision ruling the coffee industry failed to meet their burden of proof on their alternative significant risk level (ASRL) affirmative defense. To the extent the ruling is not overturned on appeal, it would set the precedent for applying the ASRL for other listed substances that form during the cooking of food.

Acrylamide is not intentionally added to coffee. Instead, when coffee beans are roasted, a chemical reaction (the Maillard reaction) occurs causing the asparagine and sugars in coffee beans to form the chemical. FDA reports “acrylamide is found mainly in foods made from plants, such as potato products, grain products, or coffee” and that generally it is “more likely to accumulate when cooking is done for longer periods or at higher temperatures.” In the past few years, bounty hunters have filed multiple actions against companies marketing foods in California that contain acrylamide and do not bear the Proposition 65 warning. In light of the recent ruling, it would be prudent for companies that manufacture or market food products that contain acrylamide to reexamine their obligations under Proposition 65.

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The Food and Drink Federation (“FDF“) has published a report on the potential impact of rules of origin on UK food and drink exporters in the likely event that the UK ceases to be part of the EU customs union after Brexit.

Rules of origin are the detailed content requirements that determine whether goods are produced “locally” in order to benefit from preferential tariff rates. Food manufacturing is an internationalized business, with UK producers regularly sourcing ingredients from across the EU and globally, often because sourcing equivalent ingredients in the UK would not be economically or practically feasible.

To date, the UK has benefited from the absence of origin requirements for trade within the EU. However, after Brexit, while it is expected that the EU and UK will negotiate largely or complete free tariffs on food and drink under a preferential free trade agreement (“FTA“), the ability of UK exporters to benefit from those rates will depend on whether their goods meet the criteria to be classified as UK products. Depending on the outcome, many UK producers who have built supply and distribution models on the basis of the single market framework may find that they no longer comply with the permitted levels of global ingredients and may therefore be ineligible for preferential trade terms and tariffs.

Because the EU and the UK are likely to maintain high basic tariffs for food and drink products, the margin between preferential treatment and non-preferential treatment is likely to be considerable. As a result, FDF argues that producers excluded from preferential terms will face a ‘hidden hard Brexit’ and may face costly restructuring of supply chains, absorption of higher costs or de facto barring from EU-UK trade, potentially requiring a restructuring of operations to avoid cross-border trade altogether.

To reduce this risk, the report sets out eight rules of origins provisions that the UK should seek to include in an EU-UK FTA to ensure any new origin rules are suitable for the globalized industries they will impact. The proposals include:

  • a de minimis allowance for non-local content in all goods, set at 10% of the value in addition to any other product-specific allowances;
  • cumulative origin requirements, meaning that goods originating in either the UK or EU are treated as originating in both for the purposes of meeting origin requirements;
  • origin protocols reflecting the unique value added by high quality manufacturing, established brands and other forms of technological input that often characterize the EU and UK food and drink sectors and contribute to a price premium for these goods; and
  • a simplification of the administrative burden of complying with origin requirements through wider use of self-certification, extended validity for origin designations and exemptions for low value shipments.

As a major producer and exporter of food and drink both to the EU and globally, failure to secure preferential treatment under an FTA will be costly for the UK and could have knock-on effects across the food and drink sector. Any solution will need to effectively balance the importance of encouraging local production with the reality of global production in order to prevent serious disruption to existing supply and distribution chains.

The full report is available here.

There have been several recent developments regarding implementation of the FDA Food Safety Modernization Act (FSMA). The below post summarizes the following topics:

  • Guidance on application of the Foreign Supplier Verification Programs (FSVP) regulation to the importation of certain live animals;
  • Draft Guidance on the definition of “small business” for purposes of the Preventive Controls for Human Food (PCHF) and Preventive Controls for Animal Food (PCAF) regulations;
  • A letter to the winegrape and hops growing industries regarding possible modifications to written assurances in the Produce Safety Rule; and
  • A report from the Government Accountability Office (GAO) scrutinizing FDA’s progress and implementation of key food safety-related activities.

Also, as a reminder, March 19, 2018 was the compliance date for supplier verification under the PCHF (Subpart G) and FSVP regulations when a supplier is a “small business” required to comply with the PCHF regulation. Additionally, April 6, 2018 is the compliance date for small businesses for the Sanitary Food Transportation regulation.

Click here to read more.

The Food and Drug Administration (FDA) has released an Excel file that lists all general inspection citations included on every FDA Form 483 (Inspectional Observations) issued for almost the past ten years, from October 2008 through February 2018. The information is specific to each establishment that has been inspected by FDA across all areas of the agency’s jurisdiction, including food facilities. We encourage all food companies to review their data so that they are aware of the information that is now readily available for review by the public.

The release of these inspection citations is connected to the Open Government Initiative issued by President Obama on January 21, 2009. Pursuant to this initiative, the agency’s stated purpose for now releasing this data set is to “improve the public’s understanding of how the FDA works to protect the public health, provide the public with a rationale for the Agency’s enforcement actions, and to help inform public and industry decision-making.” Pursuant to this initiative, the data set provides information on general inspection citations under all areas of FDA jurisdiction.

Click here to read more.

The United States Department of Agriculture (USDA) Agricultural Marketing Service (AMS) recently issued a final rule withdrawing the Organic Livestock and Poultry Practices (OLPP) Final Rule published in the Federal Register on January 19, 2017. The OLPP rule promised to impose various animal handling and raising requirements on livestock and poultry labeled Organic, but it was never allowed to go into effect during the administration transition. The Trump Administration signaled an interest in revisiting the rule and solicited comments on the OLPP. The recent final rule is noteworthy not only for its withdrawal of the OLPP, but also for the statutory and cost-benefit analyses that USDA cites to justify the withdrawal. In the recent final rule, USDA explains is withdrawing the OLPP Final Rule based on:

  • The agency’s current interpretation of 7 U.S.C. § 6905, under which USDA believes the OLPP final rule would exceed USDA’s statutory authority; and
  • Independent justification based upon USDA’s revised assessments of its benefits and burdens, and USDA’s view of regulatory policy.

The Organic livestock and poultry regulations currently published at 7 CFR Part 205 remain effective.

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The Food and Drug Administration (FDA) recently posted a document on its website that lists all importers that have been identified at entry in connection with the Foreign Supplier Verification Programs (FSVP) regulation. As discussed in the link below, this posting is a statutory requirement under the FDA Food Safety Modernization Act (FSMA). The list simply provides all of the FSVP importer names that have been declared at entry, which means that some companies are listed multiple times with slight variations in their name. We expect the list is too general to help most companies determine whether there are any entries for which they have been declared as the FSVP importer without permission. However, the list could be helpful to companies that have never knowingly been declared as an FSVP importer so they can become aware they were declared and therefore may be subject to an FSVP inspection.

Click here to read more.

Join us in London for a food seminar, “New U.S. food manufacturing, labeling, and inspection requirements – What you need to know to export foods ”

On 19 April, Hogan Lovells will offer a seminar on recent developments in U.S. food law that affect all food companies exporting food to the U.S.

U.S. partners Maile Hermida and Elizabeth Fawell will be visiting London from Washington, DC to discuss the latest U.S. food law developments that affect foreign companies that sell food in the U.S. This session will address recent changes for food safety, nutrition labeling, import filings, and facility inspections, addressing what these developments mean for exporters and how they are affected by the political climate in the United States. Both Maile and Elizabeth have extensive experience helping companies navigate these new requirements and developing effective business solutions for managing compliance.

Topics for this two hour seminar include:
— New U.S. Food Safety Requirements (FSMA)
— New Nutrition Labeling Rules
— Impacts from and Forecast for Trump Administration
— Inspections and Enforcement

 Click here for more information and to register.

On March 1, 2018, Food and Drug Administration (FDA or the agency) Commissioner Dr. Scott Gottlieb, M.D., announced new efforts to advance implementation of the new consumer Nutrition Facts label for foods, and with it a plethora of guidance documents on dietary fiber, Reference Amounts Customarily Consumed (RACCs) for product categories, declaration of added sugars on honey and similar products, and proper labeling of honey and honey products. We briefly discuss each of the following guidance documents further below:

  • Final Guidance for Industry: Reference Amounts Customarily Consumed: List of Products for Each Product Category
  • Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints; and Technical Amendments; Small Entity Compliance Guide
  • Final Guidance for Industry: Scientific Evaluation of the Evidence on the Beneficial Physiological Effects of Isolated or Synthetic Non-digestible Carbohydrates Submitted as a Citizen Petition (21 CFR 10.30)
  • Draft Guidance for Industry: Declaration of Added Sugars on Honey, Maple Syrup, and Certain Cranberry Products
  • Final Guidance for Industry: Proper Labeling of Honey and Honey Products

The deadline for submitting comments on the Draft Guidance concerning the declaration of added sugars for honey, maple syrup, and certain cranberry products is May 1, 2018. Comments should be submitted to Docket No. FDA-2018-D-0075. The other documents are Final Guidance, on which comments can be submitted at any time.

Click here to read more.

As seen in news reports, two recent Department of Justice (DOJ or Department) memoranda address the role of guidance documents in civil enforcement actions. Taken together, the two memoranda greatly limit the Department’s use of DOJ and other agencies’ guidance documents to support civil enforcement actions, as guidance documents do not impose binding standards on private parties. However, for the reasons set forth below, the memoranda are not expected to have a significant impact on enforcement actions initiated by the Food and Drug Administration (FDA) in food-related matters.

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The Federal Trade Commission (FTC) Bureau of Consumer Protection is where the action is when it comes to identifying current and future trends related to consumer protection.  Bureau actions are closely watched to identify enforcement priorities and issuance of key guidance on how the FTC contemplates exercising its authority in key areas, such as social media.  Actions the FTC takes, or elects not to take, provide critical information to marketers committed to legal compliance in a way that does not hamper appropriate business objectives.  The primary protector of consumers against fraud, deceptive advertising, and other practices that prey on unsuspecting consumers has recently updated its previous guidance on the use of endorsements and has taken enforcement action related to endorsements and several other focus areas.  This article touches on a range of topics and is intended as a quick reference guide to recent developments with an eye on what lies ahead.

Click here to read the update.